Fidelity backs £400m Colt funding

COLT Telecom's founding investor Fidelity backed and underwrote a £400m share issue which will enable the telco to complete its ambitious network building programme.

In an unusual funding, Fidelity will lift its stake in Colt from 48% to just over 54%, and its holding could reach 73% if other shareholders turn down the new share offer. The deal is conditional on other shareholders and the Takeover Panel agreeing that Fidelity need not make a statutory takeover bid for the company.

Colt shares rocketed 19p to 83p on relief that the long-planned funding had been done. The new shares will be sold at Tuesday's closing price of 62p. This is way below their February 2000 peak of £40 when the company was valued at £27.4bn. Colt chief executive Peter Manning said: 'We are absolutely delighted with this deal.'

In May Colt said it would need an extra £600m to complete its plans. But it has trimmed capital spending by £200m, reflecting both a slowing economy and less ambitious DSL and web hosting centre plans.

Jim Curvey, chairman of Colt and a senior fund manager at Fidelity, said: 'We continue to support Colt and remain very confident in its long-term prospects.'